Q2 (QTWO) Q2 2024 earnings summary

Executive summary

• Q2 Holdings reported Q2 2024 revenue of $172.9M, up 12% year-over-year and 4% sequentially, with strong sales execution and broad success in both net new and expansion wins across business lines.

• The company ended Q2 2024 with over 1,400 customers, 450 digital banking platform customers, and 23.6M registered end users, reflecting continued expansion of its customer base and product offerings.

• Net loss narrowed to $13.1M from $23.6M in Q2 2023, and adjusted EBITDA reached $29.9M, up from $17.6M a year ago.

• Investments in technology, customer support, and innovation remain a priority to maintain competitive advantage and support long-term growth.

• Subscription annualized recurring revenue rose 19% year-over-year to $633.9M.

Financial highlights

• Q2 2024 revenues were $172.9M, up 12% year-over-year; six-month revenues reached $338.4M, up 10%.

• Adjusted EBITDA was $29.9M, a 69% increase year-over-year, with an adjusted EBITDA margin of 17.3%.

• Non-GAAP gross margin was 55.7% in Q2 2024, up from 54.2% a year ago; GAAP gross margin improved to 50.2%.

• Free cash flow for the first half of 2024 was $34.8M, significantly higher than $0.5M in the prior year period.

• Backlog (RPO) reached $2.0B, up 28% year-over-year and 2% sequentially.

Outlook and guidance

• Full-year 2024 non-GAAP revenue guidance is $688.5M–$692.5M, representing 10–11% growth; adjusted EBITDA margin expected at 17%.

• Q3 2024 non-GAAP revenue guidance is $171.5M–$174.5M, with adjusted EBITDA of $27.5M–$29.5M.

• Management expects subscription revenue to continue increasing as a percentage of total revenue, driven by new customer wins and expanded usage.

• Ongoing investments in R&D and customer support are anticipated to drive long-term margin improvement and operating leverage.

• The company remains focused on expanding its product suite and customer base, particularly among financial institutions and FinTechs.